...they reckon HFT firms are responsible for 99% of orders placed on US exchanges but only 50% of trades. They flood the market with spoof orders just to get information with no intention of following them through, as you've said Lib, none of those guys have been accused.

Seems suspicious that they've chosen a loan trader outside of the US as well....wouldn't want people focusing on the foxes who have their servers actually inside the hen houses!

If - and it is MASSIVE "IF" - this story is true, then he did do something "wrong".

No, its not "spoofing" trades, or "manipulation" of orders - because plenty of trading houses do this.

So, its not that. His mistake (and that's if the story is true), is that what he did was out of tune with the central cartel's pro-recovery theme & policy (thus, helping expel some air out the bubble - and we can't have that now can we!).

For my money (excuse the pun), the story is absurd. He's a scape-goat. I mean come on, a sole trader taking on the floor against Goldman, JPM and co?

How can one place an order of some magnitude without the margins to fund the said orders to be filled?

My own CV is littered with past episodes of shame (i.e. working in the City, but not responsible for any crash!), and I can tell you three things:

1. when you come to the table to play a game to move the markets like he did - you need to come prepared with hundreds of millions - and even then, it may not work.

2. The trading arms of these firms always pump the markets with a big order every now and then. It is par for the course, before institutions take on the real buys.

3. Have a look at the order books, check out nanex too if you must - the big players do this all the time - but the direction is on the buy side, and that's probably the difference.

There are many questions to be asked, and so far, they haven't been. So, here's one:

If a suburban trader can crash the markets from his home, then what can banks with billions or nations (that we don't like) with Trillions of USDs do?

OK, here's a solution:

Ban HFT any other firms from creating fake orders. Hit them with cancellation orders and see how orderly the market becomes. But it won't be done, because these "firms" bring so-called liquidity to the markets.

....

Paitech, good to hear from you man!

I have to admit that I'm surprised that you were allowed to keep all the money you "won" from that trading session. As I recall, they were considered null-and-void, and reverse transactions were made to recover any gains.

I don't see any difference in what this guy was doing with his software compared to what the trading arms of large US banks and brokerages do using automated nano second trading programs, yet for them it is deemed legal.

Contact

Use of our site is for information purposes only and in no way constitutes investment advice. We are not regulated by the FSA in the provision of services on this site. Any opinions expressed on this site are purely the opinions of those expressing the same and do not reflect the opinions or constitute investment advice by ChartsView or their associates, affiliates or employees. The material displayed on our site is provided without any guarantees, conditions or warranties as to its accuracy